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Funny things cycles. Even odder thing, the weird way cycles impact the world of finance and indeed the parish of exchanges. Way back when, I spent more than a few months being roundly abused by the middle management (sometimes even those apparently in charge) of various market entities, for having the temerity to endorse, well the vaguest vestiges of what we now take for granted as the digital world. Of course, in the land of the blind being vindicated is usually only one single sided blink away and sure enough... Leaf through a tome from the period, say “Capital Market Revolution!” of 1999 & you soon find a tome nowadays making clear sense that the younger generation can’t see what the analogue anybody made a fuss about.
Indeed, there is a telling psychosis amongst the more mediocre linear actors in this parish...they too apparently always foresaw the impact of networked technology on markets. Except of course, they didn’t. (A relatively exalted few are genuinely eligible to receive Churchillian plaudits in this struggle but they tend to know who they are: I applaud each and every one of you).
Meanwhile sometime in the midst of financial markets failing to get to grips with new technology during the last century, the millennium ended and not a few consultants, vendors and others with foresight of goldfish proportions, had a wondrous wheeze which suggested New Year’s Eve would look like a quantitatively eased disaster movie: The traditional Sydney midnight fireworks playing second fiddle to aircraft suddenly opting out of aerodynamically defying gravity.
Of course it all turned out to be total bilge but the consultancy-vending nexus made so much money, they missed the looming dotcom bubble bursting which mostly lost them whatever they had trousered in Y2K scaremongering.
If you missed all those Y2K charlatans and other self-styled consultants (really the unemployed masquerading as advisors), well they are back with a bang! Our cups runneth over with vendor-consultant general froth right now in the wondrous world adjacent to cryptocurrency: the Blockchain, which underpins the Bitcoin protocol. For those who might have missed the action so far, this is by a long chalk, the carpetbaggers hotspot of the decade. All the usual suspects are in there and the outlook for the Blockchain is incredibly bright. Admittedly, the best bits are probably once we have got rid of all the dross of useless linear folks who are trying to jump on its back like a tropical virus molecules who find themselves on a festering corpse right beside a source of fresh water.
Yip, Blockchain has huge opportunities but, alas, most of the folks chasing the opportunity don’t seem to be putting in the research required to reach even the one eyed man perspective. Thus we are in an age of breathless hype which broadly misses the point. The Blockchain is seen as nirvana - which it isn’t. Moreover, do we all have to even remotely take seriously the idea that coalitions of multiple banks (let alone grand coalitions with exchanges and CSDs in the mix) will seriously be able to get their acts together to actually deliver anything coherently? (QV I made a point about banker retrenchment above, that cycle is abrupt…). I know, I know, a few people are in awe of Blythe Masters (whose pedigree is awesome) raising $60 million by bringing together 14 disparate financial institutions. On one hand, a hat tip of kudos to La Masters. On the other I can only offer the lady my deepest sympathy as she endeavours to herd those cats to coherent execution.
Thus we have the fascinating prospect that Blockchain solves a lot but has been hyped to being the holy grail (nothing ever is). Meanwhile the usual issues of bandwidth, network control, plus an added dose of hesitancy to truly distribute are prevalent all round (qv ASX the monopolist wants everybody on the ledger to de facto disintermediate the ASX?). That said there are anyway massive hurdles even if somebody really endeavours to deliver a broadly distributed ledger with fries, cappuccino froth and in real time. Yip, back to the good old gold rush mentality and all the usual charlatans are on board, alongside some quite credible actors. Watch this space, some exciting things will happen but progress will not be helped by the carpetbagging classes back for another Y2K experience...
Anyway, must get on, back to my, er, Blockchain-related project...
(...but then again I have been working on it for years, how many on the bandwagon can say that?)
Patrick L Young
Patrick will speak at the ICDA Blockchain conference in April.
